Payday Laws Regulated in Your State

Meeting the Demand for Small Dollar, Short-Term Credit

A majority of states have chosen to meet consumer demand for payday advances with balanced, responsible regulation for their constituents. Thirty-three states have recognized the need for a small dollar, short-term credit source for their constituents and enacted legislation that protects consumers and their access to credit, while allowing law-abiding payday lenders to operate.

States Set Terms and Rates

Payday advance laws generally govern the terms of the transaction and require certain consumer protections. Most state laws limit the principal amount of an advance, set maximum fees and interest rates that may be charged, limit a customer’s ability to renew an advance, require various disclosures, and require that the customer have the right to rescind the transaction before the end of the next business day.

State statutes often specify minimum and maximum maturity dates for an advance. Some states have enacted no-cost extended payment plans for customers that are unable to repay an advance. For all other states, CFSA member companies provide an Extended Payment Plan for customers who are unable to repay an advance when due, at no additional cost to the borrower.

Collection activities regarding past due accounts are subject to consumer protection laws and state regulations relating to debt collection practices. But all CFSA member companies are committed to collecting past due accounts in a professional, fair, and lawful manner as required by our Best Practices. In addition, under the CFSA Best Practices, a member will not threaten or pursue criminal action as a result of the customer’s check being returned unpaid.

State Regulatory Agencies Ensure Enforcement of Payday Lending Laws and Regulations

There’s no question that the payday advance industry is stringently regulated at the state level. State regulators ensure that lenders are following the laws and regulations that govern the payday advance service through rigorous monitoring and enforcement activity. Statutes authorizing payday advance services typically provide state agencies that regulate banks and financial institutions with significant regulatory powers to administer and enforce the law. Under statutory authority, state regulators have broad discretionary power and may impose new licensing requirements, interpret or enforce existing regulatory requirements in different ways, or issue new administrative rules.

In most states payday lenders are required to apply for a license, file periodic written reports regarding business operations, and undergo comprehensive state audits and examinations to ensure compliance with applicable consumer protection and other laws. The majority of states have financial requirements for licensing, such as net worth, assets, or bonding requirements.

Connecting With Our Communities

Managing household finances can be a daunting task. However, by using solid budgeting and savings techniques, you can accomplish major financial goals. In the Customer Resource Center, CFSA offers a variety of payday advance resources that support and encourage responsible lending practices, and highlight the vital role of our members’ stores in neighborhoods near you.

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Here you will find an aggregate of industry research, comprehensive data, and benchmarking tools from the short-term lending industry. They cover all payday advance business areas – consumer demographics, media hits, the latest policy initiatives, among others. Click here to access to the partner's resource library.

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For Our Policymakers

CFSA works at the federal, state, and local levels educate legislators and regulators about the role of payday advances in the broader financial services arena. This section provides resources for policymakers who believe in access to credit, want to preserve financial options and ensure balanced, substantive consumer protections. Click here to enter the Policymaker Resource Library.